Explaining the Difference Between a Deed and a Contract

A deed and a contract are two of the most important legal documents used in business transactions. Though they are often confused with one another, there are some key differences between them that must be understood. Knowing these differences can help you make sound decisions for your business and protect your interests.

What is a Deed? 

A deed is a document that transfers title or ownership of real property or goods from one party to another. It contains an offer, acceptance, and consideration from all parties involved. The main purpose of a deed is to transfer or assign rights over an asset from one person to another. It must be signed by at least two witnesses in order for it to be valid. 

What is a Contract? 

A contract, on the other hand, is an agreement between two or more parties that creates certain obligations that each party agrees to perform under specific circumstances. Unlike a deed, which only transfers ownership rights over assets, contracts create obligations on both sides that must be fulfilled in order for the contract to become binding. For example, if Party A agrees to provide services to Party B in exchange for payment, this would be considered a contract because both parties have agreed upon something in return for something else (i.e., services in exchange for money). 

Takeaways

While deeds and contracts may seem similar on the surface, they have distinct differences which can greatly affect your business dealings. Knowing when a deed should be used versus when a contract should be used can help you protect yourself from potential liabilities and ensure that all parties involved are held responsible for their actions. If you ever find yourself unsure about which document should be used in any given situation, it's always best to consult with an experienced attorney who can guide you through the process and provide further clarification as needed.